Studies Point To Return Of Residential-Install Growth

By Joseph Palenchar -- TWICE, 3/11/2010

Dallas - Three-fourths of surveyed systems integrators expect their residential-install revenues to grow this year, up from only a third who said their businesses grew in 2009, according to a fourth-quarter survey by Parks Associates and the Custom Electronic Design & Installation Association (CEDIA).

The survey polled installation companies that install home controls, entertainment systems and energy-management solutions, including multi-room audio, home theater, low-voltage wiring, and security and control systems. The installers' forecasts exclude commercial-venue installations.

In a separate study, Parks forecasts integrators' residential-install revenues will rise 6.6 percent in 2010 to $8.9 billion, reversing two consecutive years of declines. In 2009, revenues fell 4.6 percent, preceded by a 6.5 percent drop in 2008. The two-year drop followed 2007's single-digit percentage gain of 8.8, which followed years of double-digit gains. The industrywide estimates reflect installer-level revenues, including hardware sales and labor charges.

The upturn in installer sentiment and forecast channel revenues tracks a January 2010 forecast by the National Association of Home Builders (NAHB), which projected that single-family housing starts would increase 35 percent in 2010 following four years of double-digit percentage declines. The housing-start declines peaked in 2008 with a whopping 40.5 percent drop, Census Bureau statistics show.

In releasing details of the installer survey, Parks said 54 percent of surveyed integrators reported 2009 revenue declines, with reported declines averaging 4.1 percent. Another 13 percent said their revenues remained the same in 2009, and 33 percent reported revenues increased in 2009.

Among the third of polled installers whose sales grew in 2009, many had diversified to focus more on retrofit and upgrade opportunities, the survey found. In fact, retrofit projects accounted for an average 63 percent of installers' 2009 revenues. Other installers who grew in 2009 hired more sales staff and enhanced their customer support.

Installers also plan to diversify their product offerings. Although integrators continue to generate two-thirds of their revenue from A/V systems, the survey found, many plan to diversify in 2010 by offering lighting controls and solar panels for the first time. About 40 percent of integrators plan to begin installing photovoltaic solar panels, and another 38 percent are investigating the market to determine if they should do so, the survey found.

U.S. Single-Family Housing Starts, Forecast (in thousands of units)                                  Starts 1945                           325.0 1959                       1,234.0 2005                       1,715.8 (+6.7%) 2006                       1,465.4 (-14.6%) 2007                       1,046.0 (-28.6%) 2008                           622.0 (-40.5%) 2009                           443.5 (-28.7%) 2010*                         600.0 (+34.9%) Sources: Census Bureau statistics 1959-2009 (http://www.census.gov/const/newresconst.pdf) U.S. Dept. of Labor housing-start statistics 1945-1959. *National Association of Home Builders (NAHB) 2010 forecast, as of Jan.8, 2010.(